The New Jersey solar renewable energy certificate (SREC) program is one of the most lucrative financial incentives for solar available at the state level. New Jersey property owners who buy and install a solar panel system can earn hundreds (or even thousands) of dollars a year by selling the SRECs the system generates.
This article will share how the NJ SREC program works, current prices (and price projections) for NJ SRECs, and the future of the SREC program so that you can make the smartest solar installation decision possible.
How the NJ SREC program works
New Jersey has a renewable portfolio standard (RPS) that requires its utilities to produce nearly 15 percent of their electricity from renewable resources in 2018. The RPS also has a “solar carve out,” which requires that 3.2 percent of 2018 electricity sales in the state come specifically from solar power.
SRECs are used to track the amount of electricity that comes from solar. For the first ten years of a solar energy system’s lifespan, one SREC is generated for every megawatt-hour (MWh) of electricity a solar energy system produces. (For comparison, the average NJ homeowner buying a 5 kilowatt system should expect to generate about 6 MWh of solar electricity per year).
Utilities use SRECs to meet their RPS solar requirements, and the owners of solar panel systems – from individual homeowners to large-scale solar developers – can sell their SRECs to utilities through the state’s SREC market.
NJ SREC prices (current and projected)
The price of a single New Jersey SREC isn’t fixed. It varies based on supply and demand within the SREC market, and can change from day to day. According to SRECtrade, one of the biggest SREC aggregators in the country, NJ SREC prices ranged anywhere from $165 to $262.50 in 2017.
The future price of SRECs in New Jersey depends on market conditions, and some solar industry stakeholders expect there will be an oversupply of SRECs in future years, which could result in falling SREC prices. Flett Exchange, another SREC aggregator, speculates that prices may drop below $100 in the next two years. If that happens, it won’t make or break solar economics for small-scale system owners, but it could have an impact on the bottom line for large solar project developers.
Note: only individuals who own (rather than lease) their solar energy system are eligible to sell SRECs into the NJ SREC market.
Status of the New Jersey SREC program
In June 2018, New Jersey legislators signed a bill that would overhaul the state’s incentive programs for solar, including SRECs. Their proposed changes include:
- Phasing out the SREC program for new customers by 2021 (no changes would be made for current solar system owners)
- Shortening the SREC program to 10 years (down from the previous 15-year program length)
- Asking the state’s Board of Public Utilities to come up with a new framework to support solar development
What the status of the New Jersey SREC program means for you
New Jersey is one of the best states in the U.S. for solar, thanks in no small part to the SREC program. If you are considering installing solar and want to get the most out of the NJ SREC program, now is the best time to explore your options.
You can compare competing quotes from New Jersey solar installers by joining the EnergySage Solar Marketplace. Thanks to the competitive SREC market, the average NJ solar shopper on EnergySage will break even on their solar panel system in less than five years – one of the shortest payback periods in the United States.